Impact of Catastrophic Health Expenditures on Chinese Household Consumption

Abstract

China has built a social medical insurance system that covers the entire population so as to reduce the impact of diseases on individuals and families. Although the decline in the incidence of catastrophic health expenditures (CHEs) in China is encouraging, this issue remains important. On the basis of considering selectivity bias and heterogeneity, we applied propensity score matching (PSM) to analyze the 2018 data from the China Family Panel Studies. We assigned CHE households and non-CHE households to the treatment group and the control group, respectively, and used non-random data to simulate a randomized trial to investigate the impact of CHE on household consumption in China. The results of this study indicate that, when the threshold is set at 40%, the consumption of households experiencing CHEs (CHE household) is significantly lower than that of households not experiencing CHEs (non-CHE households) and that CHEs have a significant negative impact on other household consumption and a significant impact on the household property and debt. This effect still exists when the threshold is set lower, with household essential consumption most affected. The occurrence of CHEs leads to a reduction in household consumption and a significantly worsening financial situation for the CHE households, impacting the basic quality of life of the families. Therefore, it is necessary to further reform the medical and health system to reduce the high medical expenses.

The Impact of Community-Based Health Insurance on Household's Welfare in Chilga District, Amhara Regional State, Ethiopia

“…The CBHI has decreased household per-capita health expenditure of the insured group by 17, 15, and 14 percentage points for nearest-neighbor, Kernel-based, and radius matching, respectively. This finding is similar to other studies ( 2 , 14 , 47 , 48 ).…”

“…Different studies also support this; for example, the study by Wei et al ( 2 ) found that a percentage increment in the per-capita medical expenses of a household, the per-capita food consumption expenses of a household diminished by 7.6%, and also Leive and Xu ( 5 ) studied on 15 African countries, including Ethiopia, revealed that there was tradeoff relationship between health expenditure and consumption expenditure. Similarly, Shikuro et al ( 6 ) and Kiros et al ( 7 ) found that the catastrophic health expenditures on households were 21.5 and 22.5%, respectively, and such expenditures also devastate the consumption expenditures and social wellbeing.…”

“…Globally, about 100 million people were projected to be living under the poverty line and hence they were likely to face poverty due to health catastrophic spending (impoverishing health expenditures) ( 1 ). Catastrophic health expenditures (CHE) have a greater impact on household welfare around the globe, which is forcing families to reduce the consumption of necessary goods, underutilization of health services, and finally fall into the poverty trap and distract their social wellbeing ( 2 ).…”

Changes in health care utilization and financial protection after integration of the rural and urban social health insurance schemes in Beijing, China

“…As for financial protection, most studies found that China's basic medical insurance didn't reduce the out-of-pocket health expenditure [4][5][6][7]. Since financial burden is not only associated with the out-of-pocket health expenditure but also associated with residents' capacity to pay, most studies used catastrophic health expenditure (CHE) as the indicator for financial protection [8][9][10][11][12][13]. Li et al [9] found that the poorest residents spent the least but their incidence of CHE was the highest.…”

Health Shocks and Household Education Burden—A Study From the Perspective of Relative Poverty Alleviation in China

“…Take studies of the impact of health shocks on households' spending decisions as an example. Most studies find that the increased healthcare expenditures as a result of household members experiencing health shocks inevitably affect various aspects of household life, including the time allocation between work and leisure ( 12 ), consumption-savings ratio ( 13 ), and preference for investment risks ( 14 ), forcing the household to adjust their behaviors in making economic-related decisions ( 15 ) and ultimately creating a significant crowding-out effect on other household expenditures, such as income, labor supply, and education ( 16 ). This effect is more evident in rural households and households with a medium-level income ( 17 , 18 ).…”